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How two former heads at Johnson & Johnson are bringing a science-based approach to CBD

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Home » Features » How two former heads at Johnson & Johnson are bringing a science-based approach to CBD

Two former Johnson & Johnson executives teamed up in 2020 to bring their experience in consumer medical products to the CBD industry and create products that are more efficient and effective. The company’s water-soluble technology claims to be 400 per cent more bioavailable than standard oils.

Dr Gerry McNally, former head of consumer healthcare at Johnson & Johnson and John McDonagh, former head of worldwide marketing, joined forces in 2020 to show the CBD industry that there is one thing it is not paying enough attention to – bioavailability.

McDonagh kicked off his career at Johnson & Johnson straight out of university, initially working in the finance department before turning his attention to the marketing of medications like Tylenol, ammonium, Motrin and Pepcid AC. There was a common thread between these medicines. Consumers wanted to be assured of the evidence and data behind the medicine they were taking so they could be taken with full confidence. This is the missing link that McDonagh and McNally saw in the burgeoning CBD supplement industry. Too many products on the market lacked the evidence backing the formulations and too few companies were prioritising bioavailability.

“It’s not just about the ingredient, It’s really [about] how the formulation makes the ingredient accessible to the body,” McDonagh told Cannabis Wealth. “We really want to take that research, the science behind it and the technical parts of formulating quality products, and that’s what we’re really trying to do at NextEvo. There’s a lot of commonality there between my background at Johnson & Johnson and [our] work at NextEvo.”

After leaving Johnson & Johnson in 2018, McDonagh worked with a fund that looked at both cannabis and hemp investments in the wellness and lifestyle space. When he delved deeper into the industry, he found that most products on the market were likely not delivering the therapeutic benefits they were claiming to.

“We really couldn’t find anyone who was addressing some of the key issues with CBD which is the bioavailability issue,” he said. “The management teams of these companies just didn’t have the experience in consumer products like I did at Johnson & Johnson and Gerry did with his research and development background.”

Identifying a gap in the market, the pair joined forces to launch NextEvo and its trademarked technology SmartSorb, a water-soluble 5 per cent CBD concentration liquid that claims to improve bioavailability by 400 percent compared to standard oil-soluble products.

CBD is a highly lipophilic substance, meaning it dissolves particularly well in oil. This is why the majority of CBD products on the market use oil-based formulations. It’s cheaper and generally requires less time, money and expertise to produce. The issue with a lipophilic molecule like CBD, however, is that it does not absorb well in the digestive tract resulting in only a small proportion of the molecule reaching the bloodstream. CBD is also highly metabolised. According to McDonagh, most oils will get “chewed up” by the liver resulting in a bioavailability level of just 5 to 10 percent in most products.

A water-soluble emulsifier like SmartSorb differs in that it can mostly bypass the digestive system and is believed to instead be taken up by the lymphatic system, a network of vessels, organs and tissues that process an average of 20 litres of blood every day. The result is an absorption rate four times greater than that seen in standard oil-based formulations, NexEvo claims.

Preliminary studies from the company also show that water-soluble CBD products are absorbed much quicker than oils and tinctures. In one pharmacokinetic study carried out by NextEvo, SmartSorb reached its maximum concentration within one hour while in oil-based products the research team only recorded signs of uptake between 90 minutes and two hours. So, if water-soluble products appear to be more effective than oil-based, why are they not the norm?

“Most of the products we see in the market are oil-based products, in large part because they’re relatively inexpensive and easily accessible to the market,” Mcdonagh said.

“Maybe the balance of products will shift from oil base to water-soluble at some point in the future. But I think right now, you have a lot of companies that are really just looking at the margins that they can get from some of these poorly formulated products and I think, unfortunately, that’s driving a lot of current trends.”

Due to the complexity of the technology, not all water-soluble products are going to offer the enhanced bioavailability they claim to. For example, McDonagh is sceptical of companies claiming to use nano-technology to break down the particle size of CBD so it can be more easily formulated into a water-soluble emulsifier.

“Nano is kind of a false term in the category. Many people use the term nano when it really just means that they shrunk the size of the molecule,” McDonagh explained. “We don’t know if that’s really the magic key with CBD. We have seen instances where the molecule can actually be too small and so you might get a quick uptake of the product into your bloodstream, but you won’t get a sustained and overall [greater] absorption level.”

The technology behind SmartSorb was developed by one of NextEvo’s technology partners based in Colorado. With 30 years of experience in R&D at Johnson & Johnson and 32 patents under his belt, Gerry McNally took the technology and adapted it into a number of formulations including capsules and gummies.

Although water-soluble technology is still relatively rare in the world of CBD, it is a well-established formulation in the pharmaceutical industry. “It’s not so much a mystery how to make a water-soluble ingredient,” McDonagh said. The challenge lies in making the product consistent and specific.

“The difference here ensuring a couple of things,” he explained. “One is [ensuring] the particle size is the right size to maximise absorption. It’s also about selecting the emulsifiers. We’ve tested different emulsifiers to achieve the results that we have. And then there’s another element which is what we call the fingerprint of the emulsion which makes sure that each particle is emulsified correctly.”

“What Gerry and I really stand for is making sure that we’re making products that are science-based and high quality,” McDonagh added. “The reason we’re doing that is because we have the consumer in mind first; that’s who we’re formulating for. Our approach is to bring quality products and it’s more expensive and it’s more timely and it takes more investment to do that, [but] we want to do things the right way.”

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The Happy Hemper: bringing CBD to your front door

Discover one couple’s mission to bring CBD to the masses through its subscription hampers.

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Husband and wife duo, Scott and Cally Macdonald, set up Happy Hemper in the belief that people can benefit from CBD. 

The Happy Hemper CBD subscription box company was born out of the pair’s own beneficial experience with CBD. Living with anxiety, Scott and Cally began using CBD after looking for help from doctors and not finding results. The pair say that CBD seemed to provide a solution to their daily stress, and when their baby arrived, they utilised the compound to stay on top of their day-to-day lives. 

Scott says they wanted to tap into the CBD market – and realised that with 50 per cent of Brits saying they use or have used subscription box services – this could be the perfect way to help bring CBD to UK front doors.

Read more: FSA adds thousands of additional CBD products to public list

The boxes have been carefully curated by the couple, who include a wide range of CBD products including body scrubs, hair masks, lotions, bath bombs, capsules, drinks and more – varying from month to month.

“We first started taking CBD around about four years ago, and found it to be really beneficial. We both suffer from anxiety and depression. So, it was finding an alternative because we went through the leaps and bounds of doctors which was just a nightmare roller coaster. So, we were trying to find something that works,” said Scott.

“CBD seems to help you manage your day a lot easier and its all-natural.”

Cally said: “We started taking it more of when our now four-year-old was born. It started us off on an even keel and we get along better. It has been a really interesting journey, and learning more about CBD and its capabilities brought us on to figuring out what we could do – that’s how Happy Hemper came about. We were surprised nobody else was doing anything like this.”

“Around 52 per cent of the population say they use a subscription box or are using one,” added Scott. “With Covid-19 we had the opportunity to really make a push for it. The response from the public and industry has been quite overwhelming. 

“It is so exciting. There are a lot of big fish in the pond who want to know how they can get involved and tell us it is a really good idea. It is really important to us – we want to build that connection with the suppliers and our customers and get the message out there that CBD can help.

Happy Hempers’s hampers come in different size options at different prices – all offering customers the chance to save from £60 to £70 per box. The pair do everything themselves, and Cally says with the usual price of CBD products, the subscription hampers allow customers to use up all of their product without worrying about making it last. 

Read more: Will new ACMD THC recommendations impact FSA CBD list?

For the hampers, Happy Hemper works with a number of different brands, picking products that will be recognised by its customers as well as smaller CBD brands, and now brands are beginning to approach the company. All of the products that Happy Hemper uses are lab tested

“We’ve learned that you build really good connections because brands have already established on their own lane. It’s not really “pick and choose” – we’re trying the product and seeing what works best,” said Cally.

“We always want to make sure that we take less profit and have more savings for our customers and that they are getting good products because it’s about building connections rather than taking money. We want to be in this for the long term because we believe in it.

“We want it to be as afford affordable for everybody. We don’t want it to be a luxury – we’re trying to get out to the masses.”

Customers can use Klarna to spread the cost. The pair point out that their progress has not been without hitches. As many CBD companies discover on their journey, finding payment providers can be one of the problems they have to contend with due to the risk surrounding the product. 

Scott commented: “It was a really easy process to get Klarna and we spoke to them prior to make sure it would work. We’ve been through the process before with payment providers – we were building our own website and the payment provider that was incorporated within that website didn’t accept CBD companies. It was a learning curve for us – it was good to be knocked down to then build ourselves back up again.

“Payment providers are the issue and I think that’s where most issues are when it comes to what CBD companies are faced with, because cannabis companies are deemed to be high risk. A lot of payment providers don’t want to touch cannabis. The payment gateway was the most difficult obstacle to get over so we’re talking to more and more companies to try and get more advice.”

Marketing the company has been another huge obstacle say the pair. Contending with the likes of Meta and Google can make marketing CBD companies extremely difficult, because although CBD is legal here in the UK – social platforms tend to take a global approach to risky markets.

Scott said: “It’s hard to get paid ads to Facebook and Instagram and the main platforms So, there’s a lot of other sorts of twists and turns you need to try and go around to get people looking at your website, because that’s what it’s all about.

“We’re just going to keep pushing on what we’re doing try and get our brand out there. We want to be able to build our website and the subscription box. Until then, markets are a good way to get our brand awareness out there.”

Happy Hemper has won the ‘Commended award’ in the Beauty Shortlist at the Wellbeing Awards, and was a runner-up in ‘The Heat’ – Scotland’s equivalent to Dragons den where Scott delivered a three-minute pitch in front of five judges. 

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What does Kanabo’s telehealth approach mean for UK medical cannabis?

Kanabo surprised the market with its £14m acquisition of the GP Service – so, what does this mean for the UK industry and patients?

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What does Kanabo’s telehealth approach mean for UK medical cannabis?
Home » Features » How two former heads at Johnson & Johnson are bringing a science-based approach to CBD

Kanabo is looking to increase patient access to medical cannabis with its acquisition of the GP Service.

Medical cannabis has been legal in the UK since 2018. Since then, only around three prescriptions have been given through the NHS. A 2019 survey from YouGov and The Centre for Medicinal Cannabis revealed that 1.4 milion people in the UK self-medicate with cannabis for chronic pain, but there were only around 2500 private prescriptions in the UK in March 2021.

A number of problems with the prescribing of cannabis are causing a bottleneck, reducing access for patients in the UK. Kanabo is aiming to find creative solutions to this problem – and its recent acquisition of the Telehealth GP Service is aiming to improve access for patients.

Founder and CEO of Kanabo, Avihu Tamir, spoke to Cannabis Wealth about how the company plans to leverage the GP Service to transform the UK’s medical cannabis industry through telehealth.

Read more: Kanabo makes £14m acquisition of telehealth GP service

“I think that people don’t appreciate the value in the last mile – the relationship with patients,” said Tamir. “In the UK, it’s different to the rest of the world – they still see cannabis as an old industry where you’re growing, cultivating something processing and just selling. They’re missing the point that this is an industry where the majority of the value is going to be, by far, in the last mile – the retail side, the branding of the product, the relationship with the patients. 

“Like any other industry, it’s going online as well. And that’s even without understanding that this pain of safe access and prices of medical cannabis.”

Despite being one of the only countries in the world where cannabis can be prescribed for almost any condition, the country is probably one of the most difficult for access and pricing. Tamir says the sleeping giant of the UK market needs innovation.

“Every other country the trying to innovate the wheel again,” says Tamir. “In Israel, they have put made a terrible new set of regulations. Germany has also created regulation for medical cannabis along with Australia, Canada and most states in the US. 

“In the UK, the regulators did something great – they didn’t invent the wheel again. They took the set of rules for controlled substances and unlicensed medicines and said cannabis is falling into this category. Immediately that means that the regulation, existing licenses and protocols and everything is in place already today.

“The small group of patients we already have, first of all, average payments per month are by far the highest, around £200 pounds. And the retention rate is above 80 per cent per month, meaning the situation is that people are paying a lot but still coming back and taking medical cannabis so, the market is strong.”

However, more access is needed for patients and Kanabo wanted to understand why, with the high demand for cannabis medicine, there are not many more patients accessing it. 

“Why do we have limited patients when there is no real challenge in getting prescriptions and prescribing it?” asked Tamir, who thinks a large part of the problem is that the NHS is sitting on the fence by allowing the prescription of medical cannabis but not enabling their own physicians to prescribe it.

Tamir commented: “It doesn’t make sense. The second issue is that they created this bureaucratic hurdle where, if you want to get a prescription, you need to transfer a patient’s medical records to the specialist.”

This process can take weeks or months in some cases. The GP Service already has access to NHS records – which will hugely reduce the timescale for patients to access the medicine they need.

“The last challenge is that you don’t have a lot of physicians that are willing to prescribe – it could because the NHS is not supporting them, and they’re feeling worried about medical insurance. Maybe it’s just not worth for them because of all the hassle of prescribing cannabis,” Tamir commented.

Kanabo CEO, Avihu Tamir.

Kanabo’s acquisition of the Telehealth GP Service is aiming to take this hassle out of prescribing cannabis to patients – bringing down prices and increasing access for patients. 

Tamir said: “I think that with the GP service, we can solve the big problems and really create a solution that will be affordable, will be quick and will be less painful. We will really leverage the capability to educate both physicians and patients and through a very convenient platform of video calls.”

Currently, the GP Service is only prescribing non-controlled substances, but Tamir says it is in the process of getting the ability to describe controlled substances, and Kanabo is working on a process to create a committee of GPs.

Tamir said: “GPs cannot prescribe, but they can recommend. Our idea is for patients to have their initial interview with a GP who can recommend a medicine, and will then have, for example, twice a week, a committee with a specialist and sign next to their signature. So, we are starting to really find creative ways to relieve the bottleneck.”

Tamir says the response from the GP Service has been positive – its GPs understand that they are sitting on a platform that is perfect for medical cannabis as it is one of the only ones that is both private and connected to the NHS records. 

“These are the two things you need,” says Tamir. “You can’t be a public service provider because you can’t prescribe cannabis and if you’re not connected to the NHS records, then you have the bureaucratic challenge. They understand and the physicians are very supportive of medical cannabis.”

Director of Kanabo, Dr Dan Porter, MP, former Minister of Health will be very involved in the process. 

Tamir said: “I think that the stigma of cannabis is no more challenging in the UK. The challenge is that physicians worry for their insurance by prescribing something that the NHS is not signing on. So, surprisingly, it is not the stigma on cannabis holding things back.”

The move is a new avenue for the medical cannabis industry, but it is also a new market entry for Kanabo – which will see it entering the multi-billion pound telehealth market.

“This strategy for the GP Service is both entering the medical cannabis market and have a growth there, but still generating quite a lot of growth internally from the current business,” said Tamir. “I think that now it’s almost a default and that healthcare is going online. I think that there’s no question that the majority of the consultancy with GPs will be online in a matter of years. 

“There are two target markets. One is the corporate market – there is no real solution today for the corporate market. People are becoming more and more accepting of private insurance. But they’re missing this part that is maybe even less expensive than private insurance, which is giving the employees access to quick and fast meetings with the physician. 

“If you need to wait two weeks to see your GP or a few months to see a specialist – that doesn’t make sense, even for the employer. So, that is the offering that the GP Service is now targeting. The second part is beyond just the UK as a territory.”

Read more: Kanabo and Materia – innovating the cannabis supply chain in Europe

Tamir says that his dream is for any patient in the UK to be able to access a medical cannabis prescription in 90 minutes – 30 minutes for an appointment and 30 minutes to get the prescription – but this will take time. 

“I think at the beginning it will take a few days,” commented Tamir. “But, it will still be much faster and much more convenient than any other service out there. I see that cannabis can be accessible to everyone.”

However, the venture is not without its challenges. Tamir highlights a current hurdle lies in pharmacies not being able to hold cannabis – but Kanabo’s relationships with major pharmacies in the UK will a long way towards resolving this issue. 

Tamir comments: “We’re the first cannabis company in the UK that has contracts with all of the multiples in the UK – Superdrug and Boots for example. They see the GP Service as a legitimate health provider that has been working with them for years now. It’s not something new. 

“So, it is no longer a cannabis company that is trying to bring them an unknown product. It’s a service that uses and understands and they see the value. We are also the only cannabis company that has the support of the Care Quality Commission (CQC) in the NHS and which is being audited yearly.”

Since the announcement of Kanabo’s acquisition of the GP Service, the health service’s customer support has been flooded with calls and emails – which Tamir says demonstrates that there is no lack of patients in the UK. 

 

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Alfredo Pascual: the changing landscape of cannabis

SEED Innovations vice president of investment analysis discusses how the cannabis industry has developed and the growing opportunities in Europe.

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Alfredo Pascual of SEED Innovations has been in cannabis since its early days. 

Alfredo Pascual was knocking on the door of opportunity in the cannabis industry from the very beginning. His journey has taken him across Germany, Uruguay and North America and today, he is vice president of investment analysis at SEED Innovations.

SEED Innovations, headed by Ed McDermott who is also managing director of EMMAC Life Sciences Plc, has investments across medical cannabis and CBD, having started out in 2015. To date, the company has been involved in promotion and discussions around medical cannabis with UK and European policymakers and advocacy groups.

The beginnings of cannabis

Originating from Uruguay, Pascual studied business administration, then moved to Germany in 2013 to do a masters degree in public policy. It was during this time that Pascual became fascinated by drug policy reform.

“When I finished in 2016, I wanted to connect the dots and work doing something related to drugs,” said Pascual. “Cannabis was the first thing that came to my mind because of how things were evolving, particularly in North America. 

“Outside North America back in 2016, there was not a lot going on. There were some very small medical programmes, but that was before Germany changed. One of the countries that were a pioneer was Uruguay where I’m from. The law was changed in December 2013 when cannabis was fully legalised for medical, recreational and industrial uses. Things evolved quite slowly, but started to take more shape towards 2016.”

During 2016 there was a cannabis company from Uruguay, ICC, listed on the Toronto Venture Exchange – giving Pascual the inclination that the industry may develop internationally. 

He said: “I was on vacation visiting my family in Uruguay and I knocked on the door of that company. I just finished my degree in public policy in Germany, which was then debating a change of the law that would significantly improve access to medical cannabis there.”

Pascual believed he could help the company if it was planning to export to Germany, and keep track of policy developments across the globe.

“I started working at the end of 2016, then in 2017, when the CEO left, I left as well because I was working very closely with him. He ended up in Canada with another Canadian company,” said Pascual.

Over his career, Pascual went on to work as an international analyst at US business news and data resource MJ Bizz, and VP corporate development at FoliuMed, a producer of pharmaceutical-grade cannabis extracts.

“What I realised back then was that there was a desperate need for quality information. Not simply propaganda, but really professional information that would be useful for companies to make decisions,” commented Pascual.

“I was at MJBiz Con in 2017 and I proposed to start writing every now and then about what was happening outside North America.

“What I did there was to cover the industry market and regulatory developments in Europe and Latin America, which were the two continents that I am familiar with. A lot happened during those years from mid-2018 until a year ago.”

German cannabis

Throughout his time in the industry, Pascual has seen global medical cannabis gain a more credible reputation, maturity and increase in market value. In 2016 Canada had a medical programme, and Germany also had a very small medical programme with around 1000 patients. 

“There was the Israeli medical cannabis programme which is quite old,” said Pascual. “Australia also had a very small medical market by the end of 2016, and little else. Since then, I would say that many things have happened, including the industry becoming much more professional.

“I think we’ve come a long way – Canada legalised recreational, and one thing for sure is that the sky didn’t fall apart. You could say certain things could have been done better – that is always the case, but the Canadian legalisation was no disaster.

“I think that is really important because of Canada being a G20 country. The other interesting thing is that you don’t have a big movement in Canada trying to go back to prohibition for example. That’s not existent.”

Pascual highlights that things are continuing to evolve in Europe. Last year Malta became the first country on the continent to legalise recreational cannabis, and there were changes to Cannabis regulation across Switzerland and Luxembourg.

“Germany has been in a way the centre of attention because of how the market has been evolving,” said Pascual. “It was never the intention of German legislators to have other countries legalise cannabis to export to Germany, but in practice that’s what happened because the German market started to grow and policymakers saw an opportunity there in terms of exporting to the country.

“There was a wave of legalisation from 2017 to 2019 in particular that many countries were legalising medical cannabis, but they were putting the emphasis on the potential economic opportunity of exporting – in particular to Germany – and not providing access to their local population. 

“So, again, in Europe, we have many examples of countries that barely have access to medical cannabis. Germany pulled many other countries into legalisation because of the opportunity that it created because the German market is so dependent on imports – there’s very limited domestic cultivation in Germany.” 

The European opportunity

Pascual highlights that as well as Germany, the current markets seeing meaningful are Israel and Australia, with the UK trying to catch up, and that the potential opportunity for investment in cannabis is a matter of how different companies approach it.

Pascual said: “You could you could first consider the North American companies that have already invested in Europe because they not only they saw an opportunity on in the medical cannabis sector, but because they also see it as a natural development that eventually those medical markets will also turn into recreational opportunities.”

Highlighting Curaleaf as an example, Pascual says, some companies have a positive outlook on the European opportunity in Germans of both medical and recreational cannabis.

“Curaleaf didn’t wait for Germany to have legalisation promise,” Pascual commented: “They already entered the European market through because of the medical opportunity that it represents, but also because of recreation. 

“There are also companies that were hesitant about Europe but now there is the promise in Germany, they may be more interested in investing in Europe because they see it as a more tangible opportunity.

“Thirdly is companies that continue to be hesitant because they still don’t see that much of material development when it comes to the prospects of recreational legalisation in Germany. What we have to date is a promise but we still have no timeline or regulations. It is not guaranteed – they will probably face several difficulties throughout the legalisation process, and how exactly the final law and subsequent regulations and implementation of that legislation will look like is anyone’s guess. 

“So, there may be some companies that are following closely but not yet investing and waiting until they have more clarity.

“When it comes to medical cannabis, I think things have been going quite well,” he said. “We have made some significant investments in the past year. 

“SEED Innovations significantly increased our investment in Little Green Pharma, which is an Australian based company listed on the ASX. They have been pioneers in Australia and also have global goals. They bought the subsidiary of Canopy Growth in Denmark which was a big acquisition. The company has products in the German market, the France pilot project and in other European countries.”

Most recently, Little Green Pharma made further strides in Europe having been awarded an Italian Government tender for the shipment of medical cannabis into the country.

Pascual added: “Another one that it’s also quite important in size for us is Eurox that specialises only in manufacturing here in Germany. Their set up is that they are developing their cultivation in Portugal, but they already have the manufacturing capabilities here in Germany.”

Eurox has also already launched products in the market, including full-spectrum extracts that are available in German pharmacies, and in November 2021 started the white label sale of its dronabinol products to a number of select customers.

Pascual says that SEED Innovations is positive about European cannabis, with its investments in medical only, as per current legislation. However, the company is also looking towards the wellness market in CBD.

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